In the absence of near-term positive catalysts that could entice bulls on Customs Street, the now amplified political worries ahead of February general election occupies topmost the mind of investors’.
Rising from varied degrees of stock related bruises witnessed last year, some investors are now approaching the Nigerian Stock Exchange (NSE) with their eyes on this near-term concern while other discerning investors are taking advantage of low valuation of stocks and strong market fundamentals to beef up their portfolio.
Analysts at Lagos-based Cordros Capital said their outlook for equities in the near-to-medium term is negative.
“We guide investors to trade cautiously, amidst absence of a near term positive catalyst and political jitters ahead of the upcoming 2019 elections. However, macroeconomic fundamentals remain stable and supportive of recovery in the long term,” Cordros added.
From a year-open high of N11.721 trillion, the value of listed stocks moved lower on Friday January 4, 2019 at N11.425trillion; it implies investors have lost approximately N300billion in three days.
Also, the NSE All Share Index has declined by 2.52percent this year to 30,638.90 points. It opened the year 2019 at 31,430.50 points.
“In the year ahead, we expect a subdued performance in the earlier part of the year (pre-election period) and depending on the outcome of the election and smoothness of transition period, we expect a post-election equity recovery,” said research analysts at United Capital Plc in their January 2 note.
“With positive sentiment due to end-of-year activities over, we anticipate a resumption of investor apathy and foresee this driving the market in the coming weeks. Therefore, we expect another relatively quiet session on the NSE with continued negative trading”, Vetiva analysts said in their January 4 note to investors.
Despite analysts maintaining their bearish short-term outlook for the stock market this year, some stocks still kicked-off the first trading week on a positive note. Some of the stocks that have achieved over 5 percent gain in their share price this year are Julius Berger Nigeria Plc (15.67percent); Union Bank of Nigeria Plc (7.14percent); Custodian Investment Plc (7.96percent); Cutix Plc (6.71percent); and Union Dicon Plc (8percent).
On the negative side, stocks that have fuelled the record decline this year are Access Bank Plc (-14.71percent); BOC Gas (-9.98percent); Chemical and Allied Product Plc (-9.61percent); Champion Breweries Plc (13.57percent); Dangote Flour Mills Plc (-12.41percent); Diamond Bank Plc (-17.43percent); and Eterna Plc (-8.51percent).
Others are FBN Holdings Plc (-6.29percent); FCMB Group Plc (-14.29percent); JaizBank Plc (-6percent); Law Union Insurance (-8.33percent); Nigerian Breweries Plc (-7.02percent); Oando (-8percent); Transcorp (-12.12percent); UAC Properties (-8.90percent), Unity Bank (-6.54percent); Lafarge Africa Plc (-9.24percent); Wema Bank Plc (-6.35percent); and Zenith Bank Plc (-5.86percent).
Despite this dismal outing in the first trading week in 2019, analysts still see opportunities in banking, consumer goods, food and beverages, building materials, and oil and gas stocks. To hedge against capital loss, investors can buy stocks that have history of paying dividends. This comes on the heels of companies preparing for their full year earnings announcements and corporate rewards.
Iheanyi Nwachukwu
